In the latest move to reduce its £42.5m deficit on its final salary pension scheme, Honda UK has announced it is to pump £6.5m into the fund and increase its own annual contributions by over 2 per cent per year – equivalent to £2.5m.

The carmaker is also asking its UK workers at Swindon and Slough to increase their own pension contributions by 0.5 per cent.

The offer forms part of the on-going 2003 pay bargaining round.

Trade union Amicus says that it might recommend the pension plans to members if the carmaker improves its 2.2 per cent (plus 0.5 per cent merit award) offered.